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What's in Store for Boston Properties This Earnings Season?


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Boston Properties, Inc. BXP is scheduled to report first-quarter 2018 results on Apr 24, after the market closes .

Last quarter, this REIT, which mainly owns and develops Class A office real estates in the United States, delivered lower-than-expected performance in terms of funds from operations (FFO) per share, witnessing a negative surprise of 2.61%.

However, over the trailing four quarters, the company surpassed the Zacks Consensus Estimate in two occasions and missed in the other two. It delivered an average positive surprise of around 0.28% during this period.

The graph below depicts this surprise history:

Boston Properties, Inc. Price and EPS Surprise

Boston Properties, Inc. Price and EPS Surprise | Boston Properties, Inc. Quote

Shares of Boston Properties have declined 0.3% over the past three months compared with the industry 's descend of 4.7%.

Let's see how things are shaping up for this announcement.

Factors That Might Influence Q1 Results

Boston Properties, based in Massachusetts, concentrates on a few select high-rent and high barrier-to-entry geographic markets. The company's solid tenant and industry base, including several bellwethers, ensure steady rental revenue growth. Further, Boston Properties has achieved an annual compounded revenue growth rate of 7.09% over the last five years. Given the company's improving core operations, we anticipate this trend to continue, going forward. Moreover, the company is likely to experience solid contribution in 2018 from its non-same-property portfolio, mainly driven by development deliveries.

In fact, with economic improvement and recovery in the job market, healthy demand for office spaces is likely to have continued in the company's markets in the quarter under review. Particularly, growth in demand for office spaces is anticipated to have been fueled by technology and life sciences businesses.

Nonetheless, the company faces intense competition from other operators of office properties. Further, growth in the supply of office spaces in the market remains a concern because higher supply usually leads to lesser absorption and also curtails the landlord's capability to demand more rent.

Amid these, the Zacks Consensus Estimate for the base rent of $514 million reflects marginal growth from the prior-quarter figure.

Over the past 30 days, the Zacks Consensus Estimate for FFO per share for the first quarter remained stable at $1.50, reflecting year-over-year projected increase of 1.35%. The company projects first-quarter FFO per share to be in the range of $1.47-$1.49.

However, consensus estimates for revenue for development and management services are projected to be $8.62 million, down 13.5% sequentially. Further, the Zacks Consensus Estimate for first-quarter revenues is pegged at $604.5 million, indicating decline of 4.4% year over year.

Earnings Whispers

Our proven model cannot conclusively predict if Boston Properties will beat the Zacks Consensus Estimate this time. That's because it doesn't have the right combination of two key ingredients - a positive Earnings ESP and a Zacks Rank #3 (Hold) or better - to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks ESP: The company has an Earnings ESP of -0.32%.

Zacks Rank: Boston Properties carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of a positive surprise.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider as our model shows that these have the right combination of elements to report a positive surprise this quarter:

PS Business Parks, Inc. PSB , scheduled to release earnings on Apr 24, has an Earnings ESP of +0.67% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Taubman Centers, Inc. TCO , slated to release first-quarter results on Apr 26, has an Earnings ESP of +0.47% and a Zacks Rank of 3.

Simon Property Group, Inc. SPG , slated to release quarterly numbers on Apr 27, has an Earnings ESP of +0.32% and a Zacks Rank #3.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) - a widely used metric to gauge the performance of REITs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: SPG , TCO , BXP , PSB



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